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$A hits one week high on GDP data

Jason Cadden

The Australian dollar hit a one week high after the release of better than expected national accounts data for the December quarter.

At 1700 AEDT on Wednesday, the local unit was trading at 89.59 US cents, up from 89.31 cents on Tuesday.

During the local session, the currency peaked at 89.97 US cents, its highest level since February 26.

Gross Domestic Product (GDP) in Australia expanded by 0.8 per cent in the last three months of 2013, for an annual rate of 2.8 per cent.

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The figures were slightly better than economists and the Reserve Bank of Australia had expected, and drove the Australian dollar to its intraday high, FXCM market analyst David de Ferranti said.

"The better than anticipated data reinforces expectations for a period of stability for interest rates, which bodes well for the Australian dollar's yield advantage," he said.

"However, the gains for the currency have proven short lived in Asian trading."

The Australian dollar lost ground in line with afternoon falls on the Tokyo, Shanghai and Hong Kong sharemarkets.

At 1700 AEDT, the Australian dollar was at 91.56 Japanese yen, up from Tuesday's close of 90.80 yen, and at 65.25 euro cents, up from 65.03 euro cents.

Mr de Ferranti said expects developments in the crisis in Eastern Europe to be the main driver for currency markets during the offshore session on Wednesday night.

"Investor sentiment will likely continue to drive price action in European trading with the potential for abating geopolitical tensions surrounding Ukraine to offer support to high yielding currencies like the Australian dollar and the kiwi," Mr de Ferranti said.

"Worries about the Ukraine crisis have eased somewhat after Russian president Vladimir Putin said the use of force in Crimea is a last resort".